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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended July 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to ____________________
Commission File Number 0-18183
G-III APPAREL GROUP, LTD.
(Exact name of registrant as specified in its charter)
Delaware 41-1590959
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 West 37th Street, New York, New York 10018
(Address of Principal Executive Office) Zip Code)
(212) 629-8830
(Registrant's telephone number, including area code)
_____________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes XX No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 1, 1997.
Common Stock, $.01 par value per share: 6,485,781 shares.

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Part I FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements *
Consolidated Balance Sheets -
January 31, 1997 and July 31, 1997 ...........................................3
Consolidated Statements of Operations -
For the Three Months Ended
July 31, 1996 and 1997........................................................4
Consolidated Statements of Operations -
For the Six Months Ended
July 31, 1996 and 1997........................................................5
Consolidated Statements of Cash Flows -
For the Six Months Ended
July 31, 1996 and 1997........................................................6
Notes to Financial Statements.......................................................7-8

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.........................................................................9-10

Part II OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Stockholders......................................11

Item 6. Exhibits and Reports on Form 8-K
(a) 1997 Stock Option Plan
* The Balance Sheet at January 31, 1997 has been taken from the audited
financial statements at that date. All other financial statements are
unaudited.
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G-III APPAREL GROUP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General Discussion
The results for the three and six month periods ended July 31, 1997 are not
necessarily indicative of the results expected for the entire fiscal year. The
accompanying financial statements included herein are unaudited. In the opinion
of management, all adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods presented have been reflected.
During the quarter ended July 31, 1997, a newly formed subsidiary, BET Design
Studio, LLC commenced operations. The Company owns 50.1% of the subsidiary, and
accordingly consolidates its results from its startup date in May 1997.
The accompanying financial statements should be read in conjunction with the
financial statements and notes included in the Company's Form 10-K filed with
the Securities and Exchange Commission for the year ended January 31, 1997.
Note 2 - Inventories

Note 3 - Net Income (Loss) Per Common Share
Net Income (Loss) per common share is based on the weighted average number of
common shares outstanding during each of the periods, adjusted for the dilutive
effect of common stock equivalents, when applicable.
Note 4 - Notes Payable
The Company has a two year loan agreement with three banks which expires on May
31, 1999. The agreement provides for a line of credit in the amount of
$52,000,000 from May 31 to October 30, and $40,000,000 from October 31 to May 30
during each year of the agreement. The amounts available include direct
borrowings of $40,000,000 from May 31 to November 14, and $30,000,000 from
November 15 to May 30, during each year of the agreement. The balance of the
credit line may be used for letters of credit. All amounts available for
borrowing are subject to borrowing base formulas.
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Note 5 - Nonrecurring Charges
As of the year ended January 31, 1997, the Company had a remaining reserve of
approximately $2.6 million related to closure of a domestic factory and an Asian
factory. The domestic factory was closed during the fiscal year ended January
31, 1995. During the quarter ended July 31, 1997, the Company applied
approximately $1.6 million of the reserve as a reduction of Property, Plant and
Equipment, since the Company cannot assume that there will be any recoveries in
connection with a disposition of the Asian factory. The Asian factory had net
sales of $1.2 million and $1.3 million, and a net loss of $559,000 and
$413,000 for the six-month periods ended July 31, 1996 and 1997, respectively.
The status of the provision at the end of the period was:

Note 6 - Future Effects of Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share," which is effective for
financial statements both interim and annual periods ending after December 15,
1997. Early adoption of the new standard is not permitted. The new standard
eliminates primary and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share together with disclosure of
how the per share amounts were computed. Had this new standard been effective
during the quarter ended July 31, 1997, basic income per share would have been
$.38 for the three months ended July 31, 1997 and basic loss per share would
have been $.12 for the six months ended July 31, 1997. Diluted income per share
would have been $.35 for the three months ended July 31, 1997 and diluted loss
per share would have been $.12 for the six months ended July 31, 1997.
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I

TEM 2

Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Statements in this Quarterly Report on Form 10-Q concerning the Company's
business outlook or future economic performance; anticipated revenues, expenses
or other financial items; product introductions and plans and objectives related
thereto; and statements concerning assumptions made or expectations as to any
future events, conditions, performance or other matter, are "forward-looking
statements" as that term is defined under the Federal securities laws.
Forward-looking statements are subject to risks, uncertainties and other factors
which could cause actual results to differ materially from those stated in such
statements. Such risks, uncertainties and factors include, but are not limited
to, reliance on foreign manufacturers, the nature of the apparel industry,
including changing consumer demand and tastes, seasonality, customer acceptance
of new products, the impact of competitive products and pricing, dependence on
existing management, general economic conditions, as well as other risks
detailed in the Company's filings with the Securities and Exchange Commission,
including this Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS
Net sales for the three months ended July 31, 1997 were $33.1 million compared
to $26.2 million for the same period last year. For the six months ended July
31, 1997, net sales were $39.6 million compared to $31.3 million for the same
period in the prior year. The revenue increase during the three and six month
periods is attributable to the men's and moderately-priced women's lines, as
well as continued growth in the Kenneth Cole and sports licensing product lines.
Gross profit was $10.4 million for the three months ended July 31, 1997,
compared to $9.2 million in the same period last year. Gross profit as a
percentage of net sales was 31.3% for the three months ended July 31, 1997,
compared to 35.1% for the same period last year. For the six month period ended
July 31, 1997, gross profit was $10.8 million, or 27.3% of net sales, compared
to $9.4 million, or 29.9% of net sales for the same period last year. The
decrease in the gross profit percentage resulted primarily from a higher volume
of activity in certain letter of credit transactions where the Company acts as
agent for the retailer and charges a commission for services rendered.
Selling, general and administrative expenses of $5.9 million for the three
months ended July 31, 1997 were approximately $500,000 higher than in the same
period last year. As a percentage of net sales, selling, general and
administrative expenses were 17.8% in this period compared to 20.6% last year.
For the six month period ended July 31, 1997, selling, general and
administrative expenses were $11.7 million, or 29.5% of net sales, compared to
$11.1 million, or 35.4% of net sales for the same period last year. The decrease
as a percentage of net sales was the result of spreading such expenses over a
higher sales base. The increase in selling, general and administrative expenses
for the three and six month periods ended July 31, 1997 was primarily
attributable to salary increases, increased advertising costs resulting from the
requirements of certain license agreements, and start-up expenses in BET Design
Studio, LLC.
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Interest expense of $506,000 was $13,000 higher in the quarter ended July 31,
1997, compared to $493,000 in the same period last year. For the six months
ended July 31, 1997, interest expense was $566,000, a decrease of $139,000 from
the prior year. Lower interest rates under the Company's amended bank facility,
partially offset by an increase in the average outstanding balance during the
quarter ended July 31, 1997, were the primary cause of lower interest expense.
Income taxes of $1.6 million reflect an effective tax rate of 40.0% for the
three months ended July 31, 1997, compared to income taxes of $1.3 million
(effective tax rate of 40.0%) in the comparable period in the prior year. For
the six months ended July 31, 1997, the income tax benefit of $532,000 reflects
an effective tax rate of 40.0%, compared to an income tax benefit of $964,000 or
40.0% in the same period last year.
As a result of the foregoing, for the three month period ended July 31, 1997 the
Company had net income of $2.4 million, or $.35 per share, compared to a net
income of $2.0 million, or $.30 per share, for the comparable period in the
prior year. For the six month period ended July 31, 1997, the Company had a net
loss of $804,000, or $.12 per share, compared to a net loss of $1.4 million, or
$.22 per share, for the same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
During the second quarter, the Company's loan agreement was extended for two
years, with the extended term expiring on May 31, 1999. The agreement provides
for a line of credit in the amount of $52,000,000 from May 31 to October 30, and
$40,000,000 from October 31 to May 30 during each year of the agreement. The
amounts available include direct borrowings of $40,000,000 from May 31 to
November 14, and $30,000,000 from November 15 to May 30, during each year of the
agreement. The balance of the credit line may be used for letters of credit. All
amounts available for borrowing are subject to borrowing base formulas and
overadvances specified in the agreement.
Direct borrowings bear interest at the agent's prime rate (8.5% as of September
1, 1997) or LIBOR plus 250 basis points at the election of the Company. All
borrowings are collateralized by the assets of the Company. The loan agreement
requires the Company, among other covenants, to maintain certain earnings and
tangible net worth levels, and prohibits the payment of cash dividends. As of
July 31, 1997, there were $18.8 million in direct borrowings and approximately
$19.5 million of contingent liability under open letters of credit. The amount
borrowed under the line of credit varies based upon the Company's seasonal
requirements.
The Company's wholly-owned Indonesian subsidiary has a line of credit with a
bank for approximately $3.5 million which is supported by a $2.0 million
stand-by letter of credit issued under the Company's loan agreement. As of July
31, 1997, the borrowing by the Indonesian subsidiary under its line of credit
approximated $3.2 million.
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I

tem 4. Submission of Matters to a Vote of Stockholders
(a) The Company's Annual Meeting of Stockholders was held on June
19, 1997 (the "Annual Meeting").
(b) The following matters were voted upon and approved by the
Company's stockholders at the Annual Meeting:
(i) The election of nine directors to serve for the ensuing
year. The following nominees were elected as directors of
the Company (with the Company's stockholders having voted as
set forth below):

(iii)The ratification of the appointment of Grant Thornton LLP as
the Company's independent certified public accountants for
the fiscal year ending January 31, 1998. The Company's
stockholders voted as follows:

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G-III APPAREL GROUP, LTD.
1997 STOCK OPTION PLAN
1. Purpose. The purpose of the G-III Apparel Group, Ltd. 1997 Employee
Stock Option Plan (the 'Plan') is to enable G-III Apparel Group, Ltd. (the
'Company') and its stockholders to secure the benefits of common stock ownership
by personnel of the Company and its subsidiaries. The Board of Directors of the
Company (the 'Board') believes that the granting of options under the Plan will
foster the Company's ability to attract, retain and motivate those individuals
who will be largely responsible for the profitability and growth of the Company.
2. Stock Subject to the Plan. Subject to the provisions of Section 6, the
Company may issue and sell a total of 500,000 shares of its common stock, $.01
par value (the 'Common Stock'), pursuant to the Plan. Such shares may be either
authorized and unissued or held by the Company in its treasury. Subject to the
provisions of Section 6, the maximum number of shares with respect to which
options may be granted to any employee of the Company during any fiscal year is
100,000. New options may be granted under the Plan with respect to shares of
Common Stock which are covered by the unexercised portion of an option which has
terminated or expired by its terms,

by cancellation or otherwise.
3. Administration. The Plan will be administered by a committee (the
'Committee') consisting of at least two directors appointed by and serving at
the pleasure of the Board. Subject to the provisions of the Plan, the Committee,
acting in its sole and absolute discretion, will have full power and authority
to grant options under the Plan, to interpret the provisions of the Plan, to fix
and interpret the provisions of option agreements made under the Plan, to
supervise the administration of the Plan, and to take such other action as may
be necessary or desirable in order to carry out the provisions of the Plan. A
majority of the members of the Committee will constitute a quorum. The Committee
may act by the vote of a majority of its members present at a meeting at which
there is a quorum or by unanimous written consent. The Committee will keep a
record of its proceedings and acts and will keep or cause to be kept such books
and records as may be necessary in connection with the proper administration of
the Plan. The Company shall indemnify and hold harmless each member of the
Committee and any employee or director of the Company or of a subsidiary to whom
any duty or power relating to the administration or interpretation of the Plan
is delegated from and against any loss, cost, liability (including any sum paid
in settlement of a claim with the approval of the Board), damage and expense
(including legal and other expenses incident thereto) arising out of or incurred
in connection with the Plan, unless and except to the extent attributable to
such person's fraud or wilful misconduct.
4. Eligibility. Options may be granted under the Plan to present or future
employees of the Company or a subsidiary of the Company and to consultants to
and directors of the Company or a subsidiary who are not employees (provided,
however, that, notwithstanding anything to the contrary contained herein, unless
the Board determines otherwise, the Board shall have sole authority with respect
to the granting and interpretation of options granted under the Plan to any
director of the Company or a subsidiary who is not an employee and who serves as
a member of the Committee). Subject to the provisions of the Plan, the Committee
will from time to time select the persons to whom
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options will be granted, and will fix the number of shares covered by each such
option and establish the terms and conditions thereof, including, without
limitation, exercise price and restrictions on exercisability of the option or
on the shares of Common Stock issued upon exercise thereof and whether or not
the option is to be treated as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986 (an 'Incentive Stock Option').
5. Terms and Conditions of Options. Each option granted under the Plan will
be subject to the terms and conditions set forth in this paragraph and such
additional terms and conditions not inconsistent with the Plan as the Committee
deems appropriate.
(a) Option Exercise Price. In the case of an option that is not
treated as an Incentive Stock Option, the exercise price per share may not
be less than the par value of a share of Common Stock on the date the
option is granted; and, in the case of an Incentive Stock Option, the
exercise price per share may not be less than 100% of the fair market value
of a share of Common Stock on the date the option is granted (110% in the
case of an optionee who, at the time the option is granted, is a ten
percent shareholder described in Section 422(b)(6) of the Internal Revenue
Code of 1986). For purposes hereof, the fair market value of a share of
Common Stock on any date will be equal to the closing sale price per share
as published by a national securities exchange on which shares of the
Common Stock are traded on such date or, if there is no sale of Common
Stock on such date, the average of the bid and asked prices on such
exchange at the closing of trading on such date or, if shares of the Common
Stock are not listed on a national securities exchange on such date, the
closing price or, if none, the average of the bid and asked prices in the
over the counter market at the close of trading on such date, or if the
Common Stock is not traded on a national securities exchange or the over
the counter market, the fair market value of a share of the Common Stock on
such date as determined in good faith by the Committee.
(b) Option Period. The period during which an option may be exercised
will be fixed by the Committee and will not exceed ten years from the date
the option is granted (five years in the case of an Incentive Stock Option
granted to a 'ten percent shareholder').
(c) Exercise of Options. No option will become exercisable unless the
person to whom the option was granted remains in the continuous employ or
service of the Company or a subsidiary for at least six months (or for such
other period as the Committee may designate) from the date the option is
granted. The Committee may establish any vesting or other restrictions on
the exercisability of an option, subject to earlier termination as provided
herein. All or part of the exercisable portion of an option may be
exercised at any time during the option period. An option may be exercised
by transmitting to the Company (1) a written notice specifying the number
of shares to be purchased, and (2) payment of the exercise price (or, if
applicable, delivery of a secured obligation therefor), together with the
amount, if any, deemed necessary by the Company to enable it to satisfy its
income tax withholding obligations with respect to such exercise (unless
other arrangements acceptable to the Company are made with respect to the
satisfaction of such withholding obligations).
(d) Payment of Exercise Price. The purchase price of shares of Common
Stock acquired pursuant to the exercise of an option granted under the Plan
may be paid in cash and/or such other form of payment as may be permitted
under the option agreement, including, without limitation, previously-owned
shares of Common Stock. The Committee may permit the payment of all or a
portion of the purchase price in installments (together with interest) over
a period of not more than five years.
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(e) Rights as a Stockholder. No shares of Common Stock will be issued
in respect of the exercise of an option granted under the Plan until full
payment therefor has been made (and/or provided for where all or a portion
of the purchase price is being paid in installments).
(f) Option Transfers. The Committee, acting in its discretion, may
authorize an optionee to make an inter vivos gift of all or a portion of an
option (other than an Incentive Stock Option) granted to such optionee
under the Plan to (1) the optionee's spouse, children or grandchildren
('Immediate Family Members'), (2) a trust for the exclusive benefit of one
or more Immediate Family Members, (3) a partnership in which the optionee
and one or more Immediate Family Members are the only partners or (4) such
other persons as the Committee may permit. The Company shall have no
obligation to provide notice to any transferee of the occurrence of an
event (such as the termination of an optionee's service with the Company)
that could affect the transferee's rights under the Plan. Options are
transferable upon an option holder's death to a beneficiary designated by
the option holder in accordance with procedures established by the
Committee or, if no designated beneficiary shall survive the option holder,
pursuant to the option holder's will or the laws of descent and
distribution. An option that is transferred to a permitted transferee in
accordance with the provisions hereof will remain subject to the terms and
conditions of the Plan and of the option agreement governing the
transferred option. Except as otherwise permitted hereby, options are not
transferable and are exercisable during life only by the optionee.
(g) Termination of Employment or Other Service. If an optionee ceases
to be employed by or to perform services for the Company and any subsidiary
for any reason other than death or disability (defined below), then each
outstanding option granted to him or her under the Plan will terminate on
the date three months after the date of such termination of employment or
service or on such other date as may be specified by the Committee
provided, however, if the optionee's employment or service is terminated by
the Company for cause (defined below), then each outstanding option granted
to him or her will terminate upon the date of such termination of
employment or service. If an optionee's employment or service is terminated
by reason of the optionee's death or disability (or if the optionee's
employment or service is terminated by reason of his or her disability and
the optionee dies within one year after such termination of employment or
service), then each outstanding option granted to the optionee under the
Plan will terminate on the date one year after the date of such termination
of employment or service (or one year after the later death of a disabled
optionee) or on such other date as may be specified by the Committee. For
purposes hereof, the term 'disability' means the inability of an optionee
to perform the customary duties of his or her employment or other service
for the Company and its subsidiaries by reason of a physical or mental
incapacity which is expected to result in death or be of indefinite
duration; and, the term 'cause' means an optionee's (1) failure or refusal
to perform his or her duties for the Company or its subsidiaries, (2)
commission of a crime involving moral turpitude, (3) conviction for
commission of a felony, (4) attempt to improperly secure any personal
profit in connection with the business of the Company or its subsidiaries
or (5) dishonesty or willful engagement in conduct which is injurious to
the business or reputation of the Company or its subsidiaries, all as
determined by the Committee in its sole discretion.
(h) Other Provisions. The Committee may impose such other conditions
with respect to the exercise of options, including, without limitation, any
conditions relating to the application of federal or state securities laws,
as it may deem necessary or advisable.
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6. Capital Changes, Reorganization, Sale.
(a) Adjustments Upon Changes in Capitalization. The aggregate number
and class of shares for which options may be granted under the Plan, the
maximum number of shares that may be granted to any individual during a
fiscal year, and the number and class of shares covered by each outstanding
option and the exercise price per share shall all be adjusted to reflect
any increase or decrease in the number of issued shares of Common Stock
resulting from a split-up or consolidation of shares or any like capital
adjustment, or the payment of a stock dividend.
(b) Cash, Stock or Other Property for Stock. In the case of a merger,
sale of assets or similar transaction which results in a replacement of the
Company's shares of Common Stock with stock of another corporation, the
Company will make a reasonable effort, but shall not be required, to
replace any outstanding options with comparable options to purchase the
stock of such other corporation, or will provide for immediate
exercisability of all outstanding options, with all options not being
exercised within the time period specified by the Board being terminated.
(c) Fractional Shares. In the event of any adjustment in the number of
shares covered by any option pursuant to the provisions hereof, any
fractional shares resulting from such adjustment will be disregarded and
each such option will cover only the number of full shares resulting from
the adjustment.
(d) Determination of Board to be Final. All adjustments under this
paragraph 6 shall be made by the Board, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.
7. Amendment and Termination of the Plan. Except as may otherwise be
required by law, the Board, acting in its sole discretion and without further
action on the part of the stockholders of the Company, may amend the Plan at any
time and from time to time and may terminate the Plan at any time. No amendment
or termination may affect adversely any outstanding option without the written
consent of the option holder.
8. No Rights Conferred. Nothing contained herein will be deemed to give any
individual a right to receive an option under the Plan or to be retained in the
employ or service of the Company or any subsidiary.
9. Governing Law. The Plan and each option agreement shall be governed by
the laws of the State of Delaware.
10. Decisions and Determinations to be Final. Any decision or determination
made by the Board pursuant to the provisions hereof and, except to the extent
rights or powers under this Plan are reserved specifically to the discretion of
the Board, all decisions and determinations of the Committee are final and
binding.
11. Term of the Plan. The Plan shall be effective on the date on which it
is adopted by the Board, subject to the approval of the stockholders of the
Company. The Plan will terminate on the date ten years after the date of
adoption by the Board, unless sooner terminated by the Board. Options
outstanding at the time of the termination of the Plan shall not be affected
solely by reason of the termination and shall continue in force in accordance
with their terms.
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